The Excise Duty Act 2015(the Act), was assented to on on 6th November 2015 and became effective on 1st December 2015. It is among the new tax legislations that have been enacted in Kenya in an effort to further streamline tax administration, enhance tax compliance and widen the tax base. This is in line with the Government’s intention of increasing the revenue collection while at the same time creating a more business friendly tax regime.
The Act applies to providers of excisable goods and services. Goods include the production of alcoholic beverages, tobacco products, bottled water, juice, plastic bags among others. Excisable services include mobile cellular services, money transfer services and fees charged by financial institutions.
Below are some of the significant features of the Act:
- Variation of rates – the Cabinet Secretary has the authority to vary the rates by an amount not exceeding ten percent(10%). This is however subject to its publication in the Gazette and approval by the National Assembly, within seven days after its publication
- Excise Duty rate adjustments - the Commissioner, may by notice in the Gazette, adjust the Excise Duty rate annually by a proportion of the inflation rate. This is aimed at cushioning the Government against inflation
- Determination of Excise Duty rate -The Act is more specific in the sense that Excise Duty rate is based on specified units of measurement by volume or weight for instance per Kilogram, Mille or Litre for instance fruit juices, water, plastic shopping bags
- Suspension of Licence – The Commissioner may suspend an excise licence after issuing the licensee with a suspension notice. The Licensee has a right to appeal against the Suspension within fourteen(14) days of being served with the Notice of Suspension of Licence. The Commissioner after receiving the Notice of objection is required to accept appeal and revoke the suspension, provide the applicant with written notice of action or reject the appeal. Failure by the Commissioner to take any action within fourteen(14) days will revoke the suspension
- Notice - The Act now provides that where the Commissioner seeks to suspend, revoke, cancel or not renew a license he shall give a twenty one(21) days Notice to the licensee prior to the intended action outlining the grounds of the action and requesting the licensee to remedy the circumstances that may need remedy.
- General Anti-Avoidance Provision -The Act provides for tax avoidance schemes aimed at preventing abusive tax avoidance practices. In this regard tax payers should ensure their tax planning structures are not only legal but also have a commercial justification. This is in line with the Tax Procedures bill which was approved by the Kenyan parliamentary committee on 1 December 2015 and might come into force soon
- Classification of goods and services - The Customs and Excise Act CAP 472, previously based classification of products on the Tariff Codes. Under the EDA, products are now classified on a description basis